Survey shows investors favouring GCC funds

Institutional investors in the Mena region remain concerned about political risk and are favouring funds in the GCC as a result, a survey has revealed.

However, asset allocations are shifting towards equity-based mutual funds and hedge funds, and away from fixed income, the MENA Asset Management survey conducted by FTSE Global Markets and the Qatar Financial Centre (QFC) Authority revealed.

Saudi Arabia, Qatar and the United Arab Emirates were identified as the investment destinations by the 90 investors in the survey, which was drawn by 12 countries. They cited the lower political risk and greater market liquidity of these markets. Countries with a perceived political risk fared worse, with Syria, Lebanon, Jordan and Egypt rated the most negatively by investors.

On-going political strife in North Africa and the Levant is likely to increase cross-border capital flows and further concentrate assets in more stable economies, the report concluded.

Andrew Neil, Head of Research and New Media at FTSE Global Markets, said: “Heightened political risks in the MENA region has two effects: the concentration of assets in those countries that are deemed more stable, and a shift in the types of assets employed. It is no surprise then that in the more stable markets in the GCC investors are increasingly looking at equity-based investments and in the riskier markets in the North Africa and Levant bonds seem to be the investment vehicle of choice, particularly the relatively safe haven of sovereign bonds.”

Yousuf Al Jaida, Chief Strategic Development Officer of the QFC Authority added: “This latest survey shows how investor sentiment towards the region is influenced by global as well as regional trends such as shifts in flows of trade and capital.”

Saudi Arabia to remain hub for IPOs

Saudi Arabia will remain the regional hub for initial public offerings (IPOs) in the Middle East and North Africa over 2013, according to a report released by Ernst & Young International.

The new report, which annotates findings in the Middle East and North Africa, shows that Saudi Arabia was the leader across the Mena region for new IPOs in 2012, raising $1.4 billion through seven IPOs.

The KSA was followed by the UAE with $277m and Oman with $264.4m reached in IPOs respectively.  Morocco and Tunisia were the only other countries with IPO activity in 2012.

The year closed with regional companies across the Mena region raising a total of $339.8m through three initial public offerings (IPOs) in the fourth quarter of 2012, according to the report, which was significantly higher than the $226.1m raised in the fourth quarter of 2012.

Share sales were up 50 percent from the equivalent period in the previous year, with Dallah Healthcare Holding raising the biggest issuance at $144m on the Saudi Stock Exchange (Tadawul) In November.

“The outlook for 2013 will be to a great extent influenced by investor sentiments, against the backdrop of regional developments,” Phil Gandier, head of transaction advisory services for MENA, said in a statement. “Saudi Arabia and the UAE will continue to be the regional hubs of IPO activity for investors in 2013.”

“It was an eventful year for the region, with mixed implications for the capital markets,” Gandier added. “Drawing comparisons over the last two years we have noticed a steady climb in the amount of funds being raised by IPOs possibly hinting that markets are inching towards better results.”